Thứ Ba, 31 tháng 1, 2017

Elon Musk: No Leasing program from Tesla in the first 12 Months (Q3 Financial Call) part 1

  • Nov 2, 2011
    de704
    I just listened to the "Tesla Motors, Inc. Third Quarter 2011 Financial Results Q&A Conference Call". Elon musk said there will be no Leasing program from Tesla in the first 12 Months of Model S & the 160 mile version of the call wont be offered for the first 5 months. I think that sucks. :crying:

    Your Thoughts?....
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  • Nov 2, 2011
    Mycroft
    In this financial market, it would be VERY difficult to find an institution willing to loan money for a fleece on a brand new line. As for the 160 mile version, we've known all along that they would held off a while.
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  • Nov 2, 2011
    jimbakker666
    Since I'm already back at #5370 for a 160-miler, maybe I'll have the option to lease before the option to take delivery? ;) I wouldn't mind leasing at first. In fact, since the cars seem to be fixed price, if I could lease first and stay under mileage, I could buy the car after the lease and not be any worse for wear.

    At least, this is from my limited understanding of leasing.
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  • Nov 2, 2011
    AnOutsider
    Not surprising on either points. Good points regarding the cars being mile limited. Should work well for leases
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  • Nov 2, 2011
    Mycroft
    A lease is simply borrowing the depreciation during the time you use the car. Since this is an entirely new category (battery electric), with lots of unknowns, in addition to the normal excess mileage and wear & tear fees, I'm thinking there will be quite a bit of buffer built into the amount of depreciation by the lending company. So the lease may be even more expensive than a lease normally is.
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  • Nov 2, 2011
    WhiteKnight
    I think it sucks too. I think Tesla Motors is making a big miscalculation on this. For some reason they keep conflating "we've got 6,500 reservations" with "the first 6,500 don't want or need financing or leasing options." Elon Musk said it again today "we don't need a leasing program for 12 months because we've sold out the first 12 months of production." WRONG! There is a reason why 80%+ of BMWs and Mercedes are leased!

    If I can lease at attractive terms I am much more likely to "purchase" the Model S. Solar City LEASES solar equipment to people so they don't have to buy WHY does Elon Musk not get this concept?
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  • Nov 2, 2011
    AnOutsider
    I don't see anything about financing, just leasing. As others have said, there are logistical issues with leasing (calculating value is a huge one), so I can see them not wanting to tackle that off the bat. I don't see it as a miscalculation at all. They didn't say EVER, they said not in the first year.
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  • Nov 2, 2011
    Lloyd
    The reason that BMW and Mercedes leases so many cars is that they "buy down" the cost of the lease, in reality giving a lower rate to move the cars off their lot. There is no advantage for Tesla to discount their sales to a pre-sold condition. You can always finance your purchase through an outside leasing company. The rates are higher, but fair, than the subsidized ones from BMW etc. I used to work for one years ago. If you would like their number send me a PM. They would be happy to put a package together for you.
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  • Nov 2, 2011
    Tommy
    Hopefully Tesla clarifies their leasing program; as of today, the facts page on their web site still lists leasing as an option without any disclaimer as to when the leasing program will begin.
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  • Nov 2, 2011
    Joel
    To be fair, Elon did say "we could get a leasing deal done, but we don't feel it will be necessary to meet our production goal in the first 6 to 12 months."

    I interpret it as: if leasing will help meet the 6 to 12 month production goal, Tesla could revisit it.

    We'll see...
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  • Nov 2, 2011
    Adm
  • Nov 3, 2011
    gg_got_a_tesla
    SolarCity did NOT have a lease option till early 2008 - about a couple of years in. And, fixed panels on a roof are very different from an automobile, of course. Agree that leasing - to appeal to a big chunk of the mainstream auto 'buyers' - is needed but, can understand why Tesla is not gung-ho about it rightaway.
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  • Nov 3, 2011
    Lloyd
    Exactly, Leasing is a financing scheme which does not necessarily have to come from the manufacturer.

    Having worked for a leasing complany it is a paperwork nightmare. Each lease has to be maintained for insurance, proper payments late fees, etc.Repossesing someones car due to non payment or lack of insurance is not fun! Then when they come to the end of the lease the lease company has to evaluate: Mileage, wear and tear, mainenance etc, to determine if there is an additional amount owing at the end of the lease. You cannot alway just walk away from the vehicle at the end of a lease, contrary to what many think. If you get a new vehicle at the end of your lease many times any amount owing is included in your new lease to avoid any conflict.
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  • Nov 3, 2011
    robaross
    I think it is imperative that Tesla establish a relationship with at least one leasing company if they don't want to do in house leasing. An $80K car may be affordable for some but may put it out of the ballpark for others who are used to leasing BMW, M-B or Lexus, and have no equity for a down payment. It would force me to consider downgarding to a 160 or 230 mile battery pack to save the $10 to $20K.
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  • Nov 3, 2011
    WhiteKnight
    There is a huge positive to leasing for people that are brand new to electric cars and really like the option of driving it for 3 years and being able to return it at the end of the lease if it did not turn out to be all they hoped it would be.

    I am one of the people they expect to "purchase" a Model S in the first 6 months. The probability that I actually do that goes up substantially if they offer leasing.

    The idea that someone put down $5,000 so therefore they don't want or need a lease is wrong. Elon specifically said "we don't have to offer a leasing program because 2012 production is sold out." It might be "sold out" but it is far from SOLD yet.
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  • Nov 3, 2011
    ckessel
    There are external lease companies, so you might be able to arrange the lease that way. Unfortunately, leases have a built in assumption of depreciation, which is fairly predictable on well known cars. With a new Tesla, it may be hard to find a company willing to risk the lease on a car with unknown depreciation history without being charged through the nose for that risk.

    I'm not personally a fan of leasing unless the company has a killer interest rate on the lease, because generally your favorite credit union can do better on a real loan. You can get most of the benefits of a lease by buying the car with a 72 month loan (or longer if you can swing it), then selling it at the end of 3 years.
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  • Nov 3, 2011
    WhiteKnight
    The thing I like most about leasing is the embedded put option. I agree with the leasing company on the residual value, 3 years hence, in the leasing contract. If the value of the car is significantly less than the residual value (like $20K instead of $25K) then I can just hand the keys to the leasing company and walk away and I've avoided a $5K loss. [If it's $30K instead of $25K, I just buy the car at $25K]. As others have pointed out the very reason I like leasing is the same reason that the leasing companies are hesitant to set a 3 year residual value for the Model S. There is a lot more risk in buying the Model S because the residual value could be very low if (1) the battery technology turns out to not be as good as advertised (2) Tesla the company encounters significant financial headwinds, (3) etc.
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  • Nov 3, 2011
    Lloyd
    What you have described is a closed ended lease. (vs Open Ended) In an closed ended lease the lease company has accepted the risk for market conditions for the car. These leases as a result usually have a lower residual value to help protect them, and as such a higher payment. In this case yes you can turn the car back in at the end of the lease period IF: 1. mileage is equal to or less than the amount allowed in the lease. 2. The car was properly maintained 3. No damage other than normal wear and tear has ocurred.

    In an open ended lease the owner accepts the market fluctuations, and there is more flexibility to setting the residual value higher, thus knowing that there may be an amount owing at the end of the lease. The advantage is that your payments can be structured lower. Credit requirements are usually greater for this kind of lease.

    With interest rates as low as they are today, I believe that anyone considering leasing would be better off with a conventional loan 5 years. Your payments will likely be about the same or less, and you will likely build more equity for when it comes time to sell, and more flexibility for paying it off.
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  • Nov 3, 2011
    ChargeIt!
    That "Dutch bank" you mention ... is ... <drum-roll> ... Rabobank !!! (To those in the know ... that's where many of the 101 corridor from NorCal to SoCal Tesla HPC 1.0s were initially installed.)

    From your link:
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  • Nov 3, 2011
    strider
    I can tell you that when buying my Roadster I had them run the lease numbers and it would have cost $90k over 3 years. So that would assume a residual value of only $37k which I found laughable. So just because they offer it doesn't make it a good deal.
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  • Nov 3, 2011
    Adm
    Ehm, yes... You can leave the quote marks off as it is a ... <drum roll> ... Dutch bank... https://www.rabobankamerica.com/about_us/rabobank_group.jsp

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  • Nov 3, 2011
    Trnsl8r
    Given that the lease on a Roadster is $1600+ per month, and that (if advertising is to be believed) you can lease at least three Mercedes for that price and have money left over for fuel, I was never really that hopeful about being able to lease the Model S in the first place.

    But sure, if the lease option was there and at least came down into the three-figure range, it would open up for a whole new set of customers for them.

    My 2 cents.
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  • Nov 4, 2011
    ckessel
    For what level of Model S? 3-figure per month is pretty much guaranteed to be available with any normal car loan on a reasonably mid-range Model S. My credit union charges 3.49% on an 84 month loan, or almost exactly $1000 a month for $75k.

    With today's loan rates, the number of people that can afford a Model S, but can only afford it with a lease, seems incredibly tiny. People might want a lease (though I'd argue it's bad economics), but I'm not sure a lease will open up anything significant in the way of a "whole new set of customers". I think Tesla is right in that they don't need a whole new set of customers right now anyway, they can afford to open up that market segment in 2013.
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  • Nov 5, 2011
    fairlycool
    I was planning on leasing a 160M. My reservation number is 47XX which means I'll probably have to cancel and choose another car instead next year. I don't think I can wait 1 year after the Model S is released to wait to get mine.
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  • Nov 5, 2011
    Mycroft
    Patience is a virtue fairlycool. Remember the marshmallow experiment. :smile:
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  • Nov 7, 2011
    Robert.Boston
    My guess would be that P47xx would be delivered in Q1 2013.
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  • Nov 7, 2011
    qwk
    Probably even later than that since he wants a 160 mile pack.
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  • Nov 7, 2011
    Cobos
    I don't know. I've got a European P series and I was told I could choose whatever battery pack I wanted, and I should get my car in Q1 2013. That's the information I've gotten thus far, but I suppose theres plenty of room for adjustments until we get to launchtime in Norway. I still haven't seen the car or know anything about price in contrast to most US customers.

    Cobos
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  • Nov 7, 2011
    VolkerP
    Yes, I think the ability to chose any battery pack size without an additional waiting period penalty is a bit of poetic justice for the fact that we cross-ponders are left completely in the dark wrt pricing...
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  • Nov 7, 2011
    NigelM
    Hope they get something to you soon, so that people can at least see in it person. Curious as to how they are going to manage the logistics of production for EU. Cars assembled in Fremont then shipped to Europe? Weren't the Roadsters assembled in UK for the European markets? (Alert: risk of going off-topic here!:wink:)
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  • Nov 7, 2011
    VolkerP
    going OT should be OK, but I'd prefer a dedicated thread on Europe-related subjects like pricing, delivery, homologation, etc. Is there something buried in the depths of TMC?
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  • Nov 7, 2011
    doug
    Going off topic is discouraged. If you have something new to say, start a new thread. Please check though, if there is an existing thread where your comment might be relevant.
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  • Nov 8, 2011
    Jaff
    Very disappointed to hear that leasing will not be offered from the get-go on the Model S! :crying:

    I think this is a major mistake...the ability to return this "technologically bleeding edge vehicle" (after the life of the lease) if it does not perform properly should not be underestimated!
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  • Nov 8, 2011
    Jaff
    Sorry, dup. post!
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  • Nov 8, 2011
    ckessel
    We already have lemon laws and Tesla will have a warranty. I can see how turning in the car after a lease would benefit you, but how does it help Tesla? Tesla is a business and isn't going to just throw away money. A lease has to provide a benefit to Tesla for them to offer one.
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  • Nov 9, 2011
    Tessier
    What you guy's seam to be missing is that Tesla doesn't need to lease for at least 12 month's if not a whole lot longer. Why add in any complexity in the early stages to move cars if you don't have to. Tesla as it stands has 6500+ reservations and it could conceivably be 8000-10,000 when production starts. So I get that you feel offended that Tesla doesn't care about you but I am sure if they get 10,000 reservations they will have enough cash or self financed buyer to satisfy demand for the first 12+ month's of production regardless of what your reservation number is.

    I was told when I was in the NY store that Tesla feels with in the next 6 month's they will have filled the signature series and will be starting a list looking for potential people to back fill any sports that are vacated by anyone dropping out. What that say's is they feel they have plenty of customers with plenty of money and they don't need to worry about leasing or expanding the limited financing options they have for the first 12 months.
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  • Nov 9, 2011
    gg_got_a_tesla
    I think the concern is that Tesla might be assuming - maybe incorrectly? - that "all these reservations = everyone's buying"! Some of the 6500+ reservation holders might have actually been hoping to lease instead of actually buying. The question is how many?!
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  • Nov 9, 2011
    ckessel
    And how many would choose not to buy at all vs. get a loan?

    There's often a confusing of demand vs. lost sales. Way back in the day I worked at a software company with a Windows product and we'd get asked all the time about an OS/2 product (yea, way back in the day). However, nearly every single customer that wanted OS/2 was willing to buy the Windows version anyway, so the lost sales for a lack of OS/2 was almost nil.

    I suspect that's likely true with Tesla and leases amongst those with reservations, that most of the people asking for a lease aren't going to drop their sale, but will instead find an alternative financing option.
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  • Nov 9, 2011
    Lloyd
    I don't understand the big deal. If you want to lease go lease from an outside company! If you want to finance, you can finance apparently with Tesla, or with an outside company of your choosing. You have choices!!
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  • Nov 9, 2011
    Tessier
    The problem would be that it doesn't appear that right now anyone in the U.S. is stepping up to the plate and offering an option to lease a Model S. At this point I wouldn't anticipate anyone will either. The market will determine what the true depreciation of a Model S will be. The first few used Model S's that hit the market will fetch a premium because you'll essentially be able to jump the line and get instant gratification. After that we will see what the true depreciation is going to be and then once Tesla has sold enough cars to those willing to pay in full we will see leases come into play. Tesla needs to make money and the only way they are going to do that is by selling cars out right not by holding leases and collecting monthly payments holding out to be paid in full at some future date. As a share holder I would be disappointed if Tesla was leasing cars before all of the cash/fully financed cars had been sold and they were caught up with demand. That money/profit is what is going to fund the development of the Model X and future products. It's business boy's sorry for the hurt feelings.
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  • Nov 9, 2011
    qwk
    I agree. Tesla is not a charity. While Elon wants every car to be electric, he isn't going to be able to do that if Tesla continues to bleed money like they have been. There is strong demand for the Model S, and until that changes, I don't forsee Tesla offering a lease. If you want to lease, go with a leasing company as suggested before. If the reason of not wanting to go with a leasing company is the extra money they charge, then the only other options are the Leaf or waiting until Tesla has their backlog filled. Early adopters always pay more, that's just the way it is.
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  • Nov 9, 2011
    EVNow
    They don't have to do that - just work with a bank to lease the car. The car will be owned by the financial institution - just like GM does Volt leases through US Bank.
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  • Nov 9, 2011
    vfx
    Tesla did not offer a lease option on the Roadster until prodcution far exceeded demand.
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  • Nov 9, 2011
    KBF
    I realize a lot of people like leasing for various reasons, but one main hindrance for Tesla is that it would force them to predict how this car will depreciate over the lease period, which I don't think they can do at this point.

    Here is an easy to understand, basic article about leasing (written for Canadians, but has some good points for others as well); I was considering a lease on a new SUV recently, but after reading this I realized a lease would never be smart in my financial situation.

    If one really can't afford a Tesla without a lease, it would be financially smarter to wait a few years and intentionally save up for it; don't worry, electric cars will be everywhere soon enough, and for cheap. It's like all cutting edge tech - let the rich people subsidize the initial products and it won't be long until there will be a cheap Tesla for everyone.
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  • Nov 10, 2011
    Robert.Boston
    I see leases as having three primary functions in today's car market:
    1. Tax treatment: Depending on your tax situation, leases can be expensed, which can be advantageous relative to ownership.
    2. Put option: At the end of the (open) lease period, you have the imbedded option of returning the car or keeping it. This option lowers the transaction cost of selling or trading in a used vehicle; it also allows you to dump a lemon back to the car company (or the leasing entity) at an above-true-value price.
    3. Manufacturer incentives: Many car manufacturers set up lease terms at below-market rates as an implicit price discount.
    Tesla isn't interested in #3, and #2 isn't compelling for Tesla either, in part because there's no really good way to ensure that the driver has taken appropriate care of the battery (although I'm sure many drivers concerned about the longevity of Tesla Motors would like this option). The tax treatment value of a lease, though, is real.

    I expect that, as we get closer to Model S shipping out, we'll see some entities offering Model S leases; I'm betting, though, that the terms could be horrendous.
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  • Nov 10, 2011
    ahimberg
    On Taxes, don't you lose the 7500$ federal tax credit when leasing?
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  • Nov 10, 2011
    Lloyd
    Yes, because it goes to the purchaser which is the leasing company, but the leasing company can agree to pass it back to you, usually in lower payments or applied to the residual value.
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  • Nov 10, 2011
    gg_got_a_tesla
    Right; I know of Nissan LEAF dealers doing so with leases - they are taking that $7,500 straight off the sticker price before figuring out the lease payment amount.
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  • Nov 10, 2011
    Jaff
    Leasing benefits TM by getting more units on the Road than sales alone...

    BTW, in case you haven't noticed, a big business that operates only to benefit themselves (to the exclusion of their customers / corporate citizenship / etc) ain't exactly in vogue right now...

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  • Nov 10, 2011
    Jaff
    This is flat out wrong!

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  • Nov 11, 2011
    Tessier
    Which part is wrong? Does Tesla not ever need to make money:smile:, was that the wrong part, or has someone stepped up to offer private leases, because I was under the impression that no banks, leasing companies, or other organizations had stepped up to the plate to offer a lease on a Model S. Which would lead me to believe that at this point in time it's gonna be Tesla holding the note which would mean accepting monthly payments and holding out to be paid in full at some future date.
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  • Nov 11, 2011
    Lloyd
    The cost of money today for the leasing company is 6 to 8%! For an outside leasing company to make a profit the effective rate to the consumer (which does not need to be disclosed in a lease) will be in excess of 10%!! Get a car loan make the payment, then you can sell it when you want, and not at the termination of a lease contract for much less bottom line cost than a lease. Your payments may be a little more, but you will be better off at the end of three years with a purchase contract vs a lease. IMHO
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  • Nov 11, 2011
    Andrew Wolfe
    Why would it be so high? B of A or GMAC can get all the short-term money they want for 1-2% - either from the Fed or from savings accounts.
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  • Nov 11, 2011
    Lloyd
    That is what the banks are charging independent lease companies to keep their credit lines open. GMAC has been funded by the taxpayers with bailout and TARP money to keep GM producing cars. The rates I quoted were from actual lines currently in place from my previous employer with B of A. Short answer is risk vs return!!
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  • Dec 2, 2011
    Mycroft
    Leasing now going to be available?

    Tesla may have found a lease provider. Take a look at the Facts page now:

    pricing.JPG

    You would think they'd send an email out when they make changes like this. Not that I care about this, since I have no plans of leasing. But who knows what other changes may happen on any given day?
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  • Dec 2, 2011
    AnOutsider
    Wasn't that always there? It doesn't say at launch though. I was always under the impression that they intended to lease AT SOME POINT, but not right away
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  • Dec 2, 2011
    Mycroft
    Possibly it was and I didn't see it. I just noticed it and was surprised because Elon said during the November earnings call that leasing would not be available. It could be that they never got around to modifying the site verbiage to match.
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  • Dec 2, 2011
    AnOutsider
  • Dec 2, 2011
    WhiteKnight
    Yes! +1
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  • Dec 3, 2011
    fairlycool
    YESS!! I hope they have some leasing options in 2012!!
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  • Dec 4, 2011
    AnOutsider
  • Dec 5, 2011
    tdelta1000
    The line was pulled directly from the Model S section on the Tesla Motors official website. "A full suite of payment options including leasing and financing will be offered."
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  • Dec 5, 2011
    ckessel
    It's the same sentence that's been there forever and, as has been noted, leases will be offered later at some point down the line. If you want a lease on day 1 then you'll have to broker it through a 3rd party rather than through Tesla, but be prepared to pay through the nose for it since the lease company will charge a premium to guarantee a trade-in value on a car with no history from which to judge trade-in values.
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  • Dec 5, 2011
    EVNow
    It makes little sense why there wouldn't be a lease option. Afterall, 3rd party lease companies can offer the lease.

    By the time my Leaf is up for lease - if there isn't another nice EV around, I'd like to get Model S (even though its too big), if it was available for lease.
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  • Dec 6, 2011
    Robert.Boston
    Competing car companies have now shifted to advertising monthly lease costs (which seem manageable to customers) rather than the outright price (which seems scary big). By avoiding offering a lease, Tesla forces a sticker-to-sticker comparison, which is better than a lease-payment-to-lease-payment comparison, because:

    My guess is that the end-of-lease value is so uncertain that lease companies are seeking very high premiums. Car companies also hide discounts and incentives in lease rates. So, if Tesla isn't willing to discount, and if leasing partners are asking a premium lease rate to hedge against uncertain value in 4 years, the Model S lease rate would be much higher than the lease of a comparable BMW or Mercedes (even though the sticker prices are about the same).
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  • Dec 6, 2011
    Mycroft
    Good points Robert. It's that uncertain end-of-lease value that's the killer.
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  • Dec 6, 2011
    EVNow
    How many people think Volt & Leaf cost the same (even though their lease rates in '11 were the same !).

    Tesla can just use the same residual % as other EVs. Lease companies shouldn't have any problems with that. All it needs is someone from Tesla to sit down and negotiate. It does not take a ton of effort and time from executives.
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  • Dec 6, 2011
    AnOutsider
    The other EVs are from established companies too though
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  • Dec 6, 2011
    Lloyd
    Yes, Tesla needs cash to continue, not a promise and a payment!
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  • Dec 6, 2011
    ckessel
    Companies rarely handle the lease themselves or if they do it's through a spin off company. Tesla would get full payment up front from the lease company that's actually handling the loan. A lease is just a loan with some extra predefined terms in the contract.
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  • Dec 6, 2011
    Lloyd
    You are describing a 3rd party leasing company that will be available to you. BMW, GM, and Ford, etc. all handle their leases in house with their own credit organizations. Anyone is able to go to their bank, credit union, lease company and have them provide thier lease financing for them. It will not be Tesla financed however.
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  • Dec 6, 2011
    EVNow
    None of those companies do their own leases. It is all thr' a different company - ofcourse major OEMs have thier own leasing spin offs.

    Still, for Volt, GM is using a couple of external companies do the leasing - like US Bank. Tesla can do the same.

    Third parties currently don't do any EV leasing - still too new. Also, leasing needs to take car of the 7.5K in tax credit.
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  • Dec 6, 2011
    TEG
  • Dec 7, 2011
    VolkerP
    Thanks, TEG. Apparently, leasing does take efforts from executives right now.
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  • Dec 8, 2011
    EVNow
  • Dec 9, 2011
    ckessel
    I suggest you talk to Tesla.
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  • Dec 9, 2011
    Tommy
    Tesla has experience leasing, has a lease program with the Roadster and therefore questions and concerns about end of lease residuals would not seem to be valid reasons to not offer a lease on the Model S. Keeping in mind that leasing will be available but not at the start of production, the reason for this delay (albeit maybe only 6 month) I believe is because Tesla does not have the infrastructure in place to handle RETURNING Model S leases. The delay buys them time to properly get the needed additional retail space to resell the returned leases. That's my take.
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  • Dec 9, 2011
    Lloyd
    Yes, but I looked at the roadster lease. They took a $150,000 car and brought it back at $60,000 after three years! Payments were very high and I calculated that you were better off with a loan. Anyone out there with a roadster lease? What is your payment?
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  • Dec 9, 2011
    ckessel
    Exactly my point earlier. Until depreciation costs for the Model S are well known specifically, and for EVs in general, you'll pay through the nose for a lease. You're going to be better off 99.9% of the time just getting a normal loan.

    As for whether Tesla should offer leases now, until supply exceeds non-lease demand, there's not much value in it for them. Yea, they'll "lose" a few lease-only customers, but as long as demand exceeds supply it doesn't have an impact. Once they need to pick up the lease-only market to augment demand, I'm sure they'll do that.
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  • Dec 9, 2011
    Trnsl8r
    The info is not there anymore, but I seem to remember the website had the Roadster lease listed in the $1600's per month (yikes).
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  • Dec 9, 2011
    TEG
    Roadster Financing Leasing | Own a Tesla | Tesla Motors
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  • Dec 9, 2011
    TEG
  • Dec 9, 2011
    TEG
  • Dec 9, 2011
    Andrew Wolfe
    The $1658 was with no options. A typically equipped roadster was about $2100/mo.
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  • Dec 9, 2011
    JRP3
    Though the market may not yet realize it residual values on EV's should be higher than that of conventional vehicles, especially EV's such as Tesla's with very large battery packs. Mechanically EV's are less complex and the drive trains more durable, Roadster packs have proven quite durable over time, the new packs should be even more so, and the large packs that Tesla uses will have an easier life than most other EV's. Additionally replacement packs should get better and cheaper as time goes on, an older vehicle in need of a replacement pack could actually be better than when new. A well built EV can be thought of more like a boat, airplane, or home that lasts decades with occasional upgrades. A Model S could be the last car you ever buy.
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  • Dec 9, 2011
    EVNow
    Well, I lease the Leaf. I've done extensive financial & non-financial discussions around leasing on MNL. There is simply no one "correct" answer. It is just a question of relative risks. I'd like to lease - not to keep the total ownership cost down - but to allow for easy upgrades, as the technology improves. There is the added benefit of having used EVs available for others to buy.
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  • Dec 21, 2011
    mattlach
    This is ridiculous.

    I have a reservation in for a Model S.

    I may now have to cancel it.

    I originally planned on financing the 160miler using my own bank.

    Then I found out that the range is estimates at 55mph, so now I have to go for the 230 mile version.

    I fully expected the panoramic roof, the features in the technology package as well as wall charger and dual charger functionality to be included in the base price.

    I'm looking at nearly double the price I was expecting in order to get what I was anticipating. A lease program could help me here, but if there is no lease program I will - at this point - probably have to cancel my reservation :(

    I just can't make this work financially, and going without the mentioned packages would make this a downgrade from my current car, which I just won't do...

    My reservation # is in the mid 3900's. Maybe if I am lucky leases will be available by the time I can take delivery, if not There is a real possibility I will have to cancel.

    Speaking of leases, does anyone know what depreciation factor the current Roadster leases factor in for the standard 3 yer lease?
    �
  • Dec 21, 2011
    Lloyd
    Calculate all the$ you will be saving on fuel every year and applying to what you had budgeted for payments!
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  • Dec 22, 2011
    dsm363
    I think it will take time for people to transition their thinking about range from ICEs to EVs. No one seems to question the EPA highway rating when they drive 75 mph and get less than the ideal mpg but they expect the full range estimate the EV makers give them. Most of this is the EPA testing cycle and maybe the EV maker's faults. I think they need to advertise their range at 65 mph instead or list 55 mph and 65 mph.
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  • Dec 22, 2011
    mattlach
    Already done.

    I currently spend about $175 per month on E85 (sometimes 93 octane gas) for my 2011 Saab 9-5 Turbo 4.

    With the same driving habits, if Tesla's milage calculations hold true and their charging efficiency of ~80% holds true I should be spending about $36.50 per month on electricity for the Tesla after switching to time of use billing and only charging during off-peak hours. (In Massachusetts off-peak power costs are 12.001 cents per KWH in the winter and 12.550 cents per KWH in the summer including basic service, all fees and transmission costs.)

    So I should be saving ~$140 per month, which is a pittance compared to what a Model S will cost when equipped to my minimum standards if financed.

    I think I need a lease program to make this work, and I can't imagine I'm the only one. it would be interesting to see how many of the reservations wind up being canceled before delivery...
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  • Dec 22, 2011
    WhiteKnight
    I went through all the thoughts and emotions that you described. I decided though to stick with the 40 kWh pack. My feeling is that in 8 years when the warranty expires you can probably buy a 170 kWh pack for $35K and then you've got a brand new car effectively.

    I am hoping by getting the 40 kWh I will not have to take delivery before 2013 and they will have at least a leasing option to explore at that time. And of course you can always get a conventional loan.
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  • Dec 22, 2011
    Robert.Boston
    Leasing is not cheaper than a loan; to the contrary, leasing is guaranteed to be more expensive than financing on a full-life basis.

    Why?

    A lease bundles two things together: a loan, and a call option that allows you to buy the car to the leasing company at a fixed price. That call option is not free, even if the turn-back value is fairly set.

    The big problem in my mind with a Model S lease is that the terminal value is likely to be very unfairly set. With no track record for this car, or even for a car in this class, any rational leasing company will set a very low terminal value, and/or demand a high premium for this call option.

    The only benefit of the lease is a cash-flow matter: if I borrow to buy a car, at the end of the loan period I will have to have repaid the full principal (but then I'll own a car free-and-clear); if I lease to obtain the car, at the end of the lease period I have nothing except the call option on the car, which I'll have to find money to exercise (and getting a used car loan for this amount ain't great).

    If the cash-flow problem has you down, refinance your house. It's a great time to do that anyway -- lock in the jaw-dropping fixed rates of today while you can. Use the refi to draw out some home equity (assuming you have a home, and home equity) and use that to pay for all or part of the Model S.
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  • Dec 22, 2011
    WhiteKnight
    Technically it's a put option, not a call option, but sometimes it is free because the captive leasing companies choose to charge the same (or even lower) finance rate to make the leases look attractive.

    You are exactly right that the lease economics all depend on the residual value and the way the leasing company protects itself is to reduce the residual value. So most likely with no history the leases will not be very attractive BUT they might be.

    In the case of some captive leasing companies they bump up the residual value too, again to help sell cars. Something that Tesla hopefully will not have to do for years to come (spoken as a shareholder).
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  • Dec 22, 2011
    Robert.Boston
    Completely unimportant, but it's really a call option, because title remains with the lease company unless you choose to buy the car at the end of the lease, rather than you having the option to sell back the car.
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  • Dec 22, 2011
    Lloyd
    As I said before, leasing only decreases your payment, but not your total financing cost. You will have better equity and more money in the bank by purchasing vs leasing.
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  • Dec 22, 2011
    WhiteKnight
    I see your point, I stand corrected.
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